Shanghai free-trade zone (FTZ) is the first Hong Kong-like free trade area in mainland China. The plan was first announced by the government in July and it was personally endorsed by Premier Li Keqiang who said he wanted to make the zone a snapshot of how China can upgrade its economic structure. Other mainland cities and provinces including Tianjin and Guangdong have also lobbied Beijing for such approvals. The Shanghai FTZ will first span 28.78 square kilometres in the city's Pudong New Area, including the Waigaoqiao duty-free zone and Yangshan port and it is believed it may eventually expand to cover the entire Pudong district which covers 1,210.4 sq km of land.

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Shanghai vice mayor Ai Baojun to head up free-trade zone later this month

Former Baosteel boss Ai Baojun tapped to oversee development of Shanghai project

Shanghai is scheduled to officially launch its free-trade zone, the first on the mainland, this month with a city vice-mayor heading up the project.

Government sources familiar with the plan told the South China Morning Post that it will launch on September 27, when senior central government officials will fly to the city to attend a ceremony planned to mark the occasion.

Ai Baojun, currently a vice-mayor of Shanghai in charge of the city's economic and industrial development, will be named the head of the new commission to oversee the development of the free-trade zone, according to the sources.

Ai used to head Shanghai-based Baosteel, China's biggest steelmaker, before he was named vice-mayor in late 2007. He would keep the vice-mayor post but spend more time on the free-trade zone, said the sources.

The new role for Ai is seen as a big responsibility that could pave the way for his elevation to more important positions in the future.

Premier Li Keqiang could assign one of his direct subordinates, most likely a vice-premier, to work closely with Ai to fast-track decisions on the zone.

"There will be a green channel for the free-trade zone to communicate directly with the cabinet so a lot of bureaucracy can be cut out and decisions can be implemented rapidly," said one source who declined to be named because of the political sensitivity of the matter.

If all goes according to plan, the Shanghai free-trade zone will be up and running less than three months after Li first announced his intention to create it.

The project should help to showcase Li's economic reform-based philosophy, coined "Likonomics", which Barclays economists describe as a three-pronged strategy: no stimulus, deleveraging (reducing the percentage of debt) and structural reforms.

Some analysts say Li's personal involvement in pushing the project along is the clearest sign yet that the nation's leadership is determined to deliver long- mooted economic reforms.

Investors say Li must deliver on economic reform or risk seeing three decades of rising prosperity slip into reverse. But those reforms are not without their own challenges. They will throw long-protected areas of the economy directly into the path of efficient global competitors.

Li fought open opposition from financial regulators to push through the Shanghai plan, losing his temper at one meeting inside party headquarters at Zhongnanhai, which was reported by the Post on July 15.

Late last month the government announced the final approval for the special zone, which will span 28.78 sq km in Shanghai's Waigaoqiao, Yangshan and Pudong districts.

State media have compared the importance of the free-trade zone with that of the Shenzhen special economic zone that was crafted under the personal supervision of Deng Xiaoping about 30 years ago.

This article appeared in the South China Morning Post print edition as Free-trade zone will launch later this month